T
he price of crude oil and natural gas has been steadily
dropping since June 2014 after nearly five years of stability.
Less than a year later, upstream oil and gas companies were
facing a 50% drop in revenues as prices continued to dip, partly
due to factors surrounding supply and demand and partly because
– cyclically-speaking – a ‘lull’ was due.
Energy demand is closely linked to global economic activity
and the time of year, whilst supply can be affected by adverse or
unexpected, weather conditions and geopolitical unrest. Whilst
these were certainly factors, in 2014, it was a failure to reach an
agreement at a meeting in Vienna on production curbs which
sent the price plummeting.
Consistent with the reaction to major price declines in
the 1980s, companies quickly responded by implementing
strategies that would improve production efficiency and
cost. They cut capital expenditure (Capex), cut operational
expenditure (Opex) and most damaging of all, significantly
reduced headcount. Over the last 18 months, it is thought
somewhere in the region of 270 000 jobs have been lost in the
industry, and this figure is rising.
According to Oil and Gas UK’s
Economic Report 2015
,
“exploration for new resources has fallen to its lowest level since
the 1970s and, with so few new projects gaining approval, capital
investment is expected to drop from £14.8 billion (2014) by
£2 - 4 billion in each of the next three years.” This drop, and the
transformation needed to restore upstream investment and the
wider industry, brings with it some difficult decisions that are
likely to affect many lives for years to come.
Whatdoes thismeanforEurope?
Europe has certainly suffered a fair share of the pain. In fact,
across Europe alone, tens of thousands of people have lost their
jobs over the past two years as oil and gas demand continues
to fall. This is largely due to structural shifts in the European
economy, changing consumption patterns and progress being
made in renewable energy.
It has been well documented in recent weeks that a further
23 000 people who work in the North Sea upstream oil and gas
industry – the majority of whom are from the UK and Europe –
will lose their jobs between now and 2020. However, over the
same period, it is also thought some 12 000 jobs will be created
as the impact of the decline is offset by growing supply chain
opportunities in the export market, the need to decommission
assets and new prospects for an onshore shale industry. This,
coupled with a number of advanced technologies driving the
upstream oil and gas industry, means skilled professionals have
a strong chance of remaining in employment and keeping the
European industry afloat.
For those looking to try their hand at a new profession
within the energy sector, Europe is seeing its renewables
industry thrive. Countries like Scotland, Denmark and Sweden
are driving the shift from fossil fuels to renewable energies
like wind, solar and biomass, and in turn creating a host of job
opportunities for those able to transfer their skills.
Employmentopportunities
Despite experiencing the highest number of job cuts the
industry has ever seen, there are still a number of options for
the thousands of people looking to work in oil and gas, and
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